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Worldwide Exchange

News/Business. Brian Shactman. Business news including in-depth analysis of worldwide trends.

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China 51, U.s. 43, Us 33, Latvia 18, Ben Bernanke 13, Jackson 11, Europe 10, Ubs 7, Shanghai 7, Wyoming 6, Becky 6, Lithuania 6, Volkswagen 5, Chloe 5, Hsbc 5, Matt 4, Airbus 4, Oracle 4, Soviet Union 4, Richard Cookson 4,
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  CNBC    Worldwide Exchange    News/Business. Brian Shactman. Business news  
   including in-depth analysis of worldwide trends.  

    August 21, 2009
    4:00 - 6:00am EDT  

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declines at the very start of trading for the european bourses. let's see where they stand right now. ftse, dax and the cac are the main ones that we are keeping our eyes on. 0.2% higher just about in each instance. look at the forex, as well. dollar/yen at 93.90. euro/dollar at 1.4290 and sterling/dollar, 1.6490. chloe, how is it looking in asia? >> we had an interesting session out here in asia. investors more squarely focused on what was happening to the shanghai market. here is a look at the final scores. we had a couple of bright spots. the kospi higher, the sensex higher, but of course, the shanghai composite higher by 1.7%. yet you see the nikkei dropping by 1.4% and the hang seng following the way of north asia lower by 0.6%. what happened here is that there was this report that chinese regulators may actually tighten
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the rules on capital requirements for banks. investors outside of mainland china seemed to take that news as somehow that's goes to curb lending. but on the mainland, investors seem to be taking it in their stride possibly because of this news that the regulators are not planning an abrupt slowdown in lending. number two, china, of course, has that big anniversary coming up october 1st. that would be the country's 6 0s national anniversary. and there seems to be a lot of rumors on the ground that the markets are going to be stable until that day. nymex light sweet crude, it's been losing steam a little bit, off about 2 cents at $72.89. as far as brent is concerned, let's take a look at brent going the other way with by 22 cents,
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$73.56. let's say hello to matt nesto for a look at the futures. good morning. >> good morning, good day or good evening depending on where you are. if you take a look at the u.s. futures, remember, you have a three-day winning streak as we closed out on wall street. a little bit of strength in the futures if you take a peek at the fair value here today. the dow, nasdaq and the s&p, little change in the fair value. if you take a look at the bund in germany, first we'll take a look at the ten-year bund. set the peace. 3.27% is the yield there and you go home with, viola, 3.42%. we'll call it 20 basis points in your pocket. and the price of gold at this time of the day is going to sell for $940 an ounce. little changed on the session. becky, take it away. >> i want to get back on those
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euro zone august flash services pmi. it was a reading of 49.5, that is a significant increase from july. still, just fractionally below that 50 par level, if you like, and well ahead of the forecast, as well. 46.5 was what the analysts were looking for there. manufacturing pmi, again, 47.9. ahead of forecasts, ahead of the previous month, but still below that par level by just a fraction. the august flash composite pmi at 50 flat, which is right at that par level and well ahead of analyst estimates, as well. let's bring in our guest now, andrus nigg and also nicu wore achy. let's come to you both for what
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we're seeing from these pmi figures seem to back up the idea that maybe the euro zone economies are recovering or maybe weren't as bad as we had anticipated as they would be at this point. andreas, what do you think? >> good morning, rebecca. i think it's a sign that the global recession is over. i think it's a sign we're seeing signs in the u.s., the leading indicator, and we're seeing it in europe and the asian economy is the strongest. indeed, i think this is another confirmation that the worst is behind us. there will be setbacks. i think the one area that we'll still see weakness is employment. despite this, employment is lagging so i think it will still be more positive news than not going forward. >> nicu, what are your thoughts, do you agree?
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>> i must admit that i don't totally agree with andreas. i think yord for us to confirm that we are out of recession, i think we would need to see three quarters of improved growth. so from our point of view, we would still see a deep recession and what we think is that this recovery is not going to depend on stimulus packages or for investors, but especially for the u.s. being the largest economy in the world, we think this depends on the consumers. and we know that the consumers with the u.s. with their home values are only worth a fraction of what we've seen in the past few years, they're not going to get refinancing. so we think that the clear question should be how do we fex a consumer driven economy when the consumer is out of work? which leads me to the leading indicator of unemployment. i think many people are looking at unemployment figures as a
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lagging indicator whereas they should look at it as a leading one. just one more thing, in july, we saw a record of foreclosures in the u.s. so we don't believe in this recovery story as of yet. >> nicu, this is chloe in singapore. there's also that new dynamic in china. everybody is focusing on the shanghai composite. take a look at today's scores, the overseas investors took the news about possible tighter capital requirements in a different way than the mainland investors. how should you read this and how should investors take these cues? >> hi, choey. this is where i do agree with andreas where he says asia is the strongest economy as we're seeing it now. i also think that the regulators coming out saying we knight need tighter capital requirements, i agree, you can see that in two ways. there's a big article out today that icbc has given so much more
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loans, i think 19% more than last year. if you look just at icbc, they're putting more money into the economy than all the developed countries altogether. so i think that you will still see china, you will still see more loans being given in asia simply because asia has been able to put more money aside in the last few years and the private individuals in asia have more savings than they have in the u.s. however, as we all know, asia is export driven. so we still need the euro zone and the u.s. consumption to improve. >> but china has been a key drag on the equity markets this week. how would you interpret the move that we saw today?
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>> also we saw some of the markets, not asia, they were not really degreeing with it and some were agreeing. i think based on one day's action, it's hard to tell. i wouldn't be afraid of asia continuing giving more loans and that these loans will flow into the stock markets much more than we're seeing in the u.s. and/or euro zone. >> andrus, you are saying the recession is over behind us. but the only caveat is that markets have discounted this news. isn't that a dangerous sign that now only the slightest disappointment can send us lower? what's your strategy? >> yeah, you know, there's a lot of concern out there. there is a lot of worry about this recession lasting. this tells us that sentiment is
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cautious and that's a constructive sign for us. and because people are so concerned and so worried, we're taking this more as a positive sign. what we really look at is the risk premium based on our valuation metrics between 5% and 10%. still, 35% to 10% might be better than what you're getting in cash. we agree the weak link right now will be the u.s. consumer and the recovery. that will probably be the main reason why the recovery won't be as strong as we have seen in the 80s and 90s. from what we can tell, this is now over and there is a lot of money flowing into the u.s. system from the government starting in the second half of this year.
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based on those factors, we are seeing better numbers coming out. if you look at the debt service ratio in the states, you can see it's much higher than it was in the early 80s or early 90s, which suggests to us that there is less discretionary money available for consumption and that is still an important part of the u.s. economy. >> nicu, i was on the floor yesterday and they say this is a momentum market and they do not want to get in the way of a rising market, regardless of what they feel in their hearts and in their head. >> well, obviously, nobody wants to by a part of the market going
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down. everybody wants to be a part of tra trip. but where is the mon coming from? our momentum is coming from the government and the fed. how could you justify the deficit and still give them a aaa rating? i don't think it's investors that is going to help their global economy out of recession. it is based on consumers. so the traders, of course, will be happy if we see this rally continuing. but fundamentally, we are not seeing that same thing. in 2007, we saw three bank bankruptcies in the u.s. in 2009, we have above 80 u.s. banks failing with colonial bank last week being the sixth largest financial bankruptcy in the u.s. history. and this was based on the loan portfolios. now, the assets were taken over
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by another bank, but the real estate loan portfolio was over 60%. and we think a lot of u.s. banks will face the same fate as some of these banks this year. >> gentlemen, thank you for being with us this afternoon or this morning, depending on which part of the world you're in. >> some of the top stories we're watching for you today, mollor-maersk is warning that the outlook remains uncertain and says it believes it's on course to report a full year lost for the first time since its foundation way back in 1904. >> china's economy has
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apparently bottomed out. it will grow 8.5% in the third quarter. the state information center added that beijing will likely stick to its loose growth economy and that any abrupt slowdown in lending would hurt the economy. this comes amid reports that china will soon tighten the capital requirements at mainland banks. >> fed chairman ben bernanke will be in the spotlight today, speaking before a gathering of the world's top central bankers and economists in tony jackson hole wyoming. he gives the key note address at the kansas city annual symposium. his topics? reflections on a year of crisis. most fed watchers don't believe bernanke will obviously any major moves, but think he may
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outline moves on an exit strategy. folks, did you know that you can get more news, videos and blogs right there, cnbc.com. it's free. click at your leisure and pleasure. >> coming up on "worldwide exchange," we'll speak to the prime minister of latvia. plus, the euro zone factory sector edges close to a recovery in august. so is the stocking finally coming to an end? and a victim of its own success. the u.s. team has shut down its cash for clunkers program on monday. stay with us. carol, when you replaced casual friday with nordic tuesday, was it really for fun, or to save money on heat? why?
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don't you think nordic tuesday is fun? oh no, it's fun... you know, if you are trying to cut costs, fedex can help. we've got express options, fast ground and freight service-- you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn't so much fun. (announcer) we understand. you need to save money. fedex
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welcome back to the show. we are going to get to a roundup of global equities right now. that's a lot of people on one screen, isn't it? we are speaking to carolin, from zurich. in fact, we're going to speak with mannis cranny now to tell us what he thinks is going on on the ftse 100 today. it opened lower, but it seems we have gained a bit of ground now.
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>> it did, indeed, becky. the china story is clients are a little hesitant. we have an options expiring at 10 past 10 in london, 10 past 11 in europe and there is that skew to keep the miners back nudging into positive territory. there seems to be a relative discounting of the threat from the chinese to actually tighten up. rio tinto making good noises in terms of china. alcoa, likewise with bhp. hsbc trades a little firmer this morning as goldman sachs upgrades the stock with their price target in hong kong. up 22% and triple the earnings estimates up to almost three times the current level. they had an upgrade the other day. astrazeneca a little firmer as jpmorgan raises their price target from 28.5 pounds up to 30 pounds. and our object session, of course, with property right move up almost 10% today as the property website says traffic is
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improving, their yield on advertising is getting a little better. rental business is increasing. overall, an improved session. so not a bad way to go. 10 past 10 as the options expiring. let's get out to annette in germany. >> it's the same situation here. that's now hovering in positive territory, but it's mainly on the back of volkswagen. again, volkswagen says surging there up by more than 6% right now after the losses in the recent weeks. we have seen volkswagen shares done from about 50 euros to below 140 euros. now it's up by more than 6% trading at 153 euros. in general, the market is quite mixed. we have carmakers lower. bmw is one of the biggest losers in the index. we had economic data coming in which were astonishingly good for the service sector. pmi service reading is above 50
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which means expansion and that means, as well, if you have a look at the history, it's the first expansionary move since january, i believe. well, it was since january 2006. their companies are very optimistic over here as well as in business development. the reading is still below 50, but the market institute said that the decline is getting lower and slower. so that's all from here. we're going to paris now. >> the situation has improved thanks to strong economic pmi. the session is still driven by eads. the stock is up almost 0.7%
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after airbus confirmed it's still leading the race with boeing in terms of commercial activity since the beginning of the year. boeing received a 136 orders since the 1st of january, but also the company is facing a large, high number of consolidation. 89 living on year, 47 orders since the beginning of the year, which is less than half of what airbus had so far. the carmakers today, we have a mixed session with renault off on the french market. renault is losing almost 0.4% with the end of the car plan in the united states. the other french carmaker is left exposed to the u.s. markets. that's the reason why the stock is almost flat for the time being on the french market. now let's have a look at the swiss market with carolin in zurich. >> we're seeing this market move higher here by around 0.7%. it is helped by strong gains in ubs shares. they're higher around 5%.
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that's probably because the share allocations were much smaller than many investors had anticipated. let me tell you, there was strong demand for that transaction yesterday. but i've got more news on ubs and the banking sector here, especially on the tax front. a swiss banker from were indicted in a miami court yesterday for helping u.s. clients to evade taxes. that's the first time that a swiss banker who at the time did not work for ubs was charged in relation to those tax evasion charges. the two swiss men are said to have urged americans to move assets from ubs to another bank. they also told them not to disclose their accounts to the irs. ubs has announced that the banker is no longer with the company. at the other end of the board, we're seeing defensive stocks
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trading with them, novartis down 0.1%. that's it from zurich. now to saijal in singapore. >> thanks, carolin. call it the shanghai effect, but these reports that china's banking regulators tightening rules, but the shanghai composite, interesting enough, that market extending gains up 1.7%. you would think that that would have an effect on the trading stocks. but the a shares were higher where you did see an effect that the banking stocks were listed in hong kong, those stocks were quite a bit lower. the hang seng index posting the biggest weekly drop in two months. you also saw this whole risk aversion play and that feeding into the forex market. the yen surging to a one-month high. that put a lot of pressure on the japanese exporter stocks today. autos in particular are hard hit. this is because we're ending this program with this u.s. cash for clunkers and you saw a lot of weakness for shares like
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nissan as well as. that market up 0.3%. we saw strong gains for the auto plays there. very different for the -- in terms of that logic. but hyundai motor up 3.1%. kia up 1.7%. remember, though, their sales have been performing a lot of they are peers even before this whole cash for clunkers program. now over to aneesh ya in mumbai. >> hey, ageal, thanks for that. it seems to be a quiet day for an interesting and volatile week. we're pretty much on even keel from what we saw at the beginning of the week. 4,500 has not been conquered in trade today. today we have seen auto bounce
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back in trade and real estate up, as well. net/net, it's been a quiet day of trade. volumes about 5% to 10% lower than what we've seen for the entire week. with that, i'll send things westward to matt. >> all right, aneesh kra. there will be things happening in jackson hole, wyoming. fed chairman ben bernanke will be giving that huge speech there about lessons he's learned from the financial crisis. existing home sales are forecast to rise 2.2% in july to a rate of 5 million homes. that would be a ten-month high. just a few earnings reports there, we're going to get numbers out from retailer ann taylor as well as j.m. schmucker. they make jelly.
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and the market leader in peanut butter. i didn't know they made peanut butter. it's a natural parent, i guess. >> if you're an american, anyway. >> 20 years ago, more than a million people formed a 375 mile human chain right across battlic countries to demand independence from the soviet union. we'll speak to the prime minister of latvia shortly.
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tgif, everybody. i'm chloe cho. in asia, third quarter growth could hit 8.5% and warns of an abrupt slow yun. >> and i'm becky meehan. the manufacturing sectors return to growth in august. >> and i'm matt nesto in the united states. traders are going to look ahead to the fed's possible exit strategy. >> quick check on the markets, the ftse cnbc global 300 the last time we moved in was moving higher. seems to be sticking there higher by 0.1%. taking a check, as well, on the forex markets. here is what we're seeing, dollar/yen, 93.70. euro/dollar, after that pmi data, 1.4289.
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sterling taking a bit of a hit, 1.6470. >> stateside, becky, things look like this right now. up for the third day, we're en route to what could be the sixth weekly gain in seven. right now, stock futures look flat. you can see the dow, nasdaq and s&p all little changes on a fair value basis. traders clearly waiting to find out what's going on happen in jackson hole and on the economic front this morning. >> matt, thanks for that. euro zone composite pmi has hit the 50 level. services pmi hit its highest level in 14 months with 49.5. manufacturing contracted to a reading of 47.9, beating market forecasts. the key survey, around 2,000 companies show business expectations soaring to their highest level in over two years. joining us now to discuss is neal mckinnon. neal, better than expected
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figures. at what point do we look at these better than expected figures that have come out from various parts of the economy and decide, yes, we're back at 50 and things are getting better now? >> well, i think the markets were expecting better numbers as far as the euro zone pmi is considered. that's consistent with the global picture we're seeing saying what an impressive rebound in manufacturing activity. and for companies like germany and france which are cyclical in nature and benefit from a turn around in ex ports and any improvements in global trade, they're the ones that have been leading the way in the euro zone. so this is a story we're seeing, you know, right across the board that manufacturing is recovering and it's encouraging hopes that the worst of the recession in these economies is over. >> but not recovering in a uniform fashion, though. we know already that there are some euro zone economies like ireland and spain which have a very different picture. should we worry that they're going to drag down the
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outperformers? >> well, i think they'll lag behind. when i was on the program last friday, i made the distinction of a north-south divide, if you like. even the netherlands, surprisingly, were lagging behind. i think that, you know, generally, they'll be pulled along by the leaders, you know, france and germany, and that we'll see a gradual improvement. what has to be a worry, i think, for the leaders in the euro zone economies is the strength of the euro. and i think if we saw the euro continue to strengthen against the dollar, that will certainly start to become a worry for exporters. >> neal, ben bernanke will probably be the only guy in jackson hole, wyoming, wearing a suit. what do you make of this day? >> certainly all eyes are on the jackson hole symposium. it's a very important gathering.
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certainly in the past when we look at the themes that have dominated the fed debates here, it certainly is something that economists and strategists and investors should focus on carefully. certainly it's no surprise that the major theme is mr. bernanke's speeches, the financial examine economic crisis of the last year or so. but i think in particular, as you intimated earlier on in your comments, that the markets will be looking at any exit strategy and certainly mr. bernanke has spoken about an exit strategy before. i think he'll be cautious, though, about encourage iing an sort of expectations in the market that the fed is about to end its unorthodox credit easing. you know, i think that while the economy is showing signs of turning around, there is a question mark about the strength and sustainability of the economic recovery, particularly as regards to consumer spending
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going into next year. but certainly, i think this will be a key highlight for markets today. >> i want to quickly get your thoughts on existing home sales today. 2.2% is the increased forecast here today. what can we say we have successfully or fully turned the kaush on housing? >> well, there are i think tentative indications that we might be putting a low in place for the housing cycle. certainly there are some worries, foreclosures, for example, have been increasing. you know, that is a worry. there is quite a sizable inventory in the american housing market. after the declines that we saw last year in housing starts and another data relating to the housing sector, it does appear that we are beginning to stabilize and that's good news. >> neil mckinnon, thank you so much for coming in. we appreciate your input into it. chloe. >> becky, let's move on to china
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where the markets are moving forward today saying that the government is getting ready to tighten those capital rules of banks. this comes after learning they the markets. the interesting thing that we have to point out really, today, is that this report about perhaps tighter capital requirement rules, that really spooked the rest of the markets here in asia. on the other hand, it looks like chinese investors taking it in their stride. what happened here? >> we think this is actually an accumulation time for getting back into china. we're in the first wave, i think, of infrastructure spending in china and also in
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the u.s. the u.s. stimulus package which was for infrastructure actually one dollar hasn't been spent yet. that's actually going to start happening now. so this is normal jitters. for us at the moment, we're not too concerned about china. we're looking for that one to benchmark for where we should be investing elsewhere. >> that's right. that is why you have some people saying hong kong is a fundamental of things happening in china. also there seems to be a lot of rumors that equity markets will hold up for the big day, the national anniversary marking 60 years. do you subscribe to that view at all? >> well, i certainly think china is a good proxy for china. we are looking at taiwan right now as an investment area. in hong kong, you can see that the residential property prices
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have increased significantly since the beginning of the year. at for the company, we are finding we're getting inflow of funds and we're searching for new offices because we're on a recruitment campaign for new advisers. what we can see is that the office rentals are starting to pick up already. so we think that bottom is in place and it's a good sign for the economy. >> if that's the case, china is one market that you cannot short. therefore, is it time to get out or how do you see this? >> for us, you would look at china as an investment on its own and you would look for the china effect. china has been buying all goodies worldwide because they know that the recovery is
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intact, is going to improve, so they're taking mot commodity positions now. those stocks have been quite depressed. at the latter stage of the year, they're going to be probably the forerunners in this. right now our preference has been financials in the u.s. and especially financial etfs, which is crazy. they've started some upward momentum now. the percentage gain possibility there is huge. as of three weeks ago, we started to invest in the real estate sector of the exchange traded funds in the u.s. again, down somewhere in the region of 95%, 98%, property prices haven't gone down that much as an overreaction. so we will be thinking china is okay. we've had a bit of a profit taking. we're not in china directly at the moment. we're waiting for this pause to wear out.
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we prefer taiwan. that will be boosting the resource sector again. 6/. >> i wanted to ask how predictive these thinktank gdp estimates have been historically. >> well, for us, we're a momentum and trend-following company. so we're absolute return in nature and we look for money flows and where the flows are going. for me, you know, the talk for gdp forecast and all the rest of it, what happened when the markets fell off a cliff, that didn't do anybody any good because people extrapolate these figures forward. all we can say at the moment is the correction that was happening in july is over and people are buying on the dips again.
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china does seem a bit stalled, but there are plenty of other markets that are really lively at the moment. as i said, the real estate and the financials, also the biotech sector and stuff like rio and bhp, these are premium companies. also in hong kong -- >> hey, graham, we've got to go. we're running out of time, we're so sorry. great to talk to you, have a fabulous weekend. graham biddy, his take from china. the prime ministers of latvia, lithuania and are gathering to mark the 23rd anniversary of the battlic way. more than a million people formed a 375 mile human chain across all three countries to demand their independence from
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the soviet union. 20 yearsing on, the battlic way has been hit by the deepest recession in the european union. martin baccardax is in the area and joins us now with more on this story. >> just as you were illustrating, the timeliness to our visit here in nida is crucial because it was 20 years ago that seismic changes took place and it led to ultimately the fall of the berlin wall and the end of the political structure as we knew it at the time. in many ways, the stakes are no less high. we're talking about the devaluation of currencies which could have effects all across europe. let's set the scene and we'll come back and talk to the prime minister of latvia. when the battlic countries became eu members in 2004, a new
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chapter began in the region's economic history. inside the collective security of the union, currencies were pegged to the euro and money was pouring in. >> a lot of companies, a lot of hassles were borrowed in europe rather than local currency and at much lower interest rates and that stimulated economic booms. >> property prices skyrocketed, especially in the lat veean capital. >> there was a period when flats here were more expensive than in denmark. >> but then along came the credit crunch and easy money evaporated. the battlics were faced with a huge challenge. >> they crew too fast and they ended up with large current account deficits. at some stages, 25% of gdp. when capital is scarce, it's very difficult to attract foreign money into the country. so basically, they had to slow down. >> foreign money would also have
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been deterred by seeing what happened to swedish bank investments in latvia. >> a very significant part lending to the battlic countries has been from the swedish banks and the swedish banks have had to increase significant ly thei provisions for bad debt. >> so avoid bankruptcy, latvia received a $7.5 billion loan. the latvias had to cut spending. >> the measures in latvia are very severe. they've now cut public sector wages by 30% this year. >> the brutal economic situation resulted in a government crisis. the country's finance minister stepped down. the country's prime minister stepped up. he's vowed to keep it pegged to the euro, but others are conceptual. >> they had to devalue their
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currencies. and the deevaluationation option isn't completely rolled out at the present. >> the region has been through more challenging times before. weekend is the 20th anniversary of the battlic way, the day the battlic people formed a 600 kilometer human chain in demand for independence. the three countries are just as unified today in their determination to tackle the current economic crisis. well, that's the history. let's talk about the future. the prime minister of latvia gratefully joins us now on the program. thank you so much to your time. the report that we just heard laid out a lot of the concerns and the pain that the lat veean people are having to sustain to steady the economic ship. do you think enough is being done? >> well, certainly more sinks are to be done and one of the crucial issues is preparing the 2010 budget. we foresee fiscal consolidation to be done. so really, while the fall in the
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economy has stabilized in the last water and we expect that things will gradually improve in the economy, we're still expect quite a lot of trouble with 2010 budget. >> this is the difficulty i think a lot of people say, falling wages, falling tax revenues and a contracting economy at the same time that you're cutting spending and really not exporting in the way that you have been in previous years. how do the numbers add up? >> well, as regard to ex ports, ex ports are doing fine. we would expect sharper fall in ex ports, but in fact, it's doing relatively well. and since january, we have a positive current account and that's after having more than 20% of gdp current account deficits. now we have a positive current account. as regards to tax revenues, those are certainly down, probably some quarter down to
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compare with year and it has to be absorbed by budgetary. we are reducing salaries, reducing pensions, reducing different expenditures and with all the fiscal are a justment we held on, we expect this year to stay with a budget deficit below 10% of gdp. >> now, this is exactly the point which i find fascinating. you and your finance minister have had your differences, but you both agree that devaluation is not the option that you would prefer right now and you would to defend it as best you can. but people in latvia are looking at enormous wage cuts and spending cuts. maybe they're thinking themselves, is this the price that we need to pay, particularly for entering into a free market. >> certainly this is one of the hardest crisis which has hit
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latvia. but if you look at other options, like this devastation would affect people in much more quicker and much more devastating way because some 95% of our loans are in euros. which means people would have a huge problem with repaying the loans. and as a problem, once you start developing it, you do not really know where you finish. you may think you control, but experience of many countries see they can't really even control the dem lagz and currency can go down 30%, 50%, and it's hard to control. so in this sense, while reduction of budget expenditures is probably something we can do in a controlled and gradual way. >> now, you have been in office since march of this year. you'll face lekdz in october next year. do you think your coalition is strong enough now to absorb the
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differences in opinion about where the spending cuts should come in the latvia budget? there are arguments about how it should be cut in health care, pensions, etcetera. is it solid enough to beat those arguments back? >> we go for the consolidation of 500 million lots next year. all the coalition parties have signed a letter of intent to international monetary find with which we reach the staff level agreement. so it means that coalition formerly is agreeing to the fiscal consolidation. what exactly will be the way, of course, this we'll find out during the budgetary procedure. >> and finally, prime minister, how, if at all, has the timetable changed for latvia's entry into the single currency? >> well, right now, we expect to meet most of the criteria in
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2012. it means that we could join euro in 2014. >> 2014. excellent. prime minister, thank you so much for the your time this morning. really appreciate it. and we'll see you later on in our programming when we get all of you gentlemen together. rebecca, let me hand it back to you and our thanks to the prime minister of latvia. >> excellent, martin. we'll have more on that a little later on. we do have a special report on eastern europe on our website, cnbc.com. that is the place to look. we'll have plenty more on that. it's well worth a check. >> coming up, looking for the exit sign. ben bernanke is going to address the world's leading central bankers today in jackson hole. but will he give us any clues on that exit strategy? >> plus, we'll be getting the latest on the currency markets when we come back. we'll leave you with a quick check on the dollar rates.
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let's take a look at the currency markets. here is where we currently stand. dollar/yen is at 93.78 with the strengthening a bit.
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i guess the dollar is down by 0.4%. as far as the euro is concerned after the ppi figures, euro/dollar, 1.4295. a bit of a slip for sterling, 1.6485. against the euro, it's down, we're at 0.8670. we're now joined by our guest and let's start with the euro zone pmi. better than expected. is that fitting through the way you may have anticipated to the euro zone? >> i mean one speak about the euro environment. if you look backwards a lot, euro/dollar is 1.38, 1.43, so there is not much going on in the currency market. even on the fundamentals coming out, just driving it up 30, 50, 60 points which move into daily range. what we believe is the currency market is getting moved with
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stock market, you know, goes very much in line with this. if the stock market goes up, the dollar goes down and that is more driving the market than anything else. i think these figures are not going to be dramatic impact on the euro zone at all. >> good morning, felix. this is chloe in asia. what do you think of the china factor now playing out in the currency markets? today if you take a look, the japanese yen gaining quite a bit of strength. yet investors took it in their different ways. >> i mean, china is going to be more and more do many a dominant factor in the currency market. because also, china is going to be more a dominant factor in the whole economy. it's very difficult, you know, for the currency market to understand which kind of changes and which kind of impact that would have to the yen all
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around. that we have to see. i'll tell you, i cannot give you a good answer. overall, of course, it is going to be have an effect what china is going to do in the future with the currency, if that is going to be one of the major currency pairs or not. but the influence to yen, we have looked at that and tried to find correlations in the years. but it's very difficult to find a correlation from china to the yen. >> felix, some people say that six months and beyond, the u.s. has an incentive for a weak dollar, if only to help keep its financing costs doin' and is to pay off its debt. >> i mean, of course, we are in an environment where all the central banks would love to have stability, they would love to have not a strong currency because they have to survive for the next -- you know, in next time. and america is still in the
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leading position. they are taking very much care of the currency. there is not going too strong. but that is the game to play. i mean, america, of course they don't like to have a very strong dollar, but i tell you, if you ask the politicians, they don't like a strong euro, either. but the central banks probably agree to each other is that they don't want to have any big currency flows at all. they would like to have in this environment, which is still a little bit of stress. you know, the big stress was just short behind and they want to see stability. they want to have big volatility in the currency market at all and they are actually happy about it happening. that's probably the perfect scenario. the dollar is a little weaker. they like that. stock market is going up. it looks all okay. >> felix, thanks for coming up and speaking to us today. coming up in which in the next hour of "worldwide exchange," euro zone pmi kicks
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higher in august. but this system leaves results stocking. >> plus, he's done it again. smashing his own world record in the 200 meter, 19.91 seconds. it all went down in berlin last night. is this the greatest sprinter of all time?
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hello, everybody. i'm chloe cho. here in asia, chinese markets rise for the second day. >> i'm becky meehan. in europe, the services and pmi return to growth in august. >> and i'm matt nesto. in the u.s., ben bernanke will be looking back at the financial crisis, traders looking ahead to see if the fed has a possible exit strategy. >> bon jour. welcome to the "worldwide exchange" if you're just joining us in the u.s. we are broadcasting live all over the world. u.s., asia, europe, we've got you covered. take a look at the futures. three days and counting. we're in a holding pattern if you take a look at it right now.
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not a lot of move premarket here today and not surprising with all that is ahead of us. by 0 o'clock this morning, if you take a look at the treasury market here today, quick check in germany on the bund. we'll show you 3.27%. a little increase in the yield, so a weakness in the price there. if you take a look at the ten-year treasury right now, the last check was just below 3.5%, 3.44%. not a lot of movement. >> matt, let's take a check on the ftse cnbc global 00 index. we have had mini highs since then. the swiss market is looking
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relatively strong, about 1.1% higher there. chloe, how has the asian market been shaping up today? >> it was a mixed picture and amid very choppy trade on this friday as investors headed out for the weekend. the attention is still very focused on china. we have this news about china possibly reigning in capital requirement rules and for the rest of the markets, that spelled weakness. on the other hand, investors in china took it on their stride. another thing is at a high we learned in june. that was the picture over here in asia. let me send it over to the u.s.
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with matt. >> chloe, thank you very much. richard is head of asset allocation at hsbc. richard, i'd like to ask you a question here, there has been a dogfight in terms of who is leading right now. equity traders have been following the oil traders and the oil traders are watching the stock market. everybody seems to be watching china. we have this 8.5% gdp figure out here today and futures that are flat. who is leading us right now in this global recovery story? >> that is a broader question, as well. if you look at the equity market, it gets boosted by the confidence numbers. i think the brutal truth is nobody really knows how strong this recovery is going to be
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and, therefore, they're looking for any sort of signs that they can find as to any clues they can find as to what on earth is going on. and that is a problem. if you talk to investors at the moment, we've had this huge run up in prices, both of course for oil, commodities in general, equities and credit, now what is the short answer. >> so i mean, i guess it brings up the crucial point which matt alluded to is whether we're right in thinking that from the emerging markets from china have enough growth to prop up growth in the rest of the world, as well. those figures we had today, that 8.5% growth estimate from a think tank in china suggests maybe we could rely on china for that growth. should we be more concerned than the market appears to be at the moment? >> look, the problem with china is that, a, it's really too
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small. and b, it's in a sense too domestic. you know, if we look at imports, they're still extremely weak from china. in a sense, it's almost impossible to see china bailing out the global economy. it's just not big enough. so china is important to the global economy, but it's not that important yet in terms of boosting growth. >> well, richard, what do you make of this view, this growing view that perhaps even the stimulus effects in china may be wearing off and what does that mean for the global economy, especially the commodities? >> well, in terms of the global economies, i said, i'm not sure that it means very much, really. in terms of xhdty prices, yes, it could be slightly problematic. now we've got growth this year and next, actually, relatively
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strong. really, all they're doing the trying to reign in bank lending that was huge. so, you know, your big problem here is that we just don't know what's going on on the ground. okay. the stock market has fallen a lot, but i'm not sure that the stock market per se tells you very much about what's going on in the underlying economy. it does tell you that there is an awful lot of liquidity going into the stock market and now if they're going to reign in liquidity, perhaps stocks are more fragile than they were. but it doesn't, i think, tell you very much about the underlying economy. >> richard cookson, thank you. he is going to stay with us and give us more insight. still to come on "worldwide exchange," you know it's the 20th anniversary of the battlic way. more than a million people formed a human chain spanning nearly 400 miles calling for independence from the soviet union. they got it and now they face a new challenge.
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welcome back to the show. we are watching up our emerging markets this week. the prime ministers of latvia,
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lithuania and estonia are gathering. more than a million people formed a 370 mile long human chain across all through country toes demand their independence from the soviet union. 20 years on, they've been severely hit by the global economic crisis, suffering the deepest recession in the european union. we are joined by martin baccardax to check on life in the seaside resort of lithuania. you're seeing interesting guests already. why don't you wrap things up for us. >> thanks, rebecca. it's been a fascinating job. we spoke with andrus, the prime minister of lithuania, the host country, as well as the new prime minister of latvia, probably the man one of the most difficulty jobs in europe and the youngest prime minister, only 37 years old. the contraction in the baltic economies has been extreme in the second quarter of this year, between 18% and 22%.
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that has led to massive budget defic deficits. let's hear what the two gentlemen had to say. >> for the time being, we are able to finance our deficit borrowing internally or in international markets. we are quite happy back in june to issue 500 million arrow bonds in the european market and if be needed, we should do it the same again. >> we're reducing salaries, reducing pensions, reducing different kind of expenditures. and with all the fiscal adjustment we held on, we expect this year to stay with a budget deficit below gdp. >> what mr. dombrovksi was saying illustrates the difficulties of the economy. you have massive waves and benefits that need to take place
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what the currency is pegged to the euro and the euro is stronger than the dollar throughout most of this year. that means baltic ex ports has been inhibited. it means that the pain interiorly is not met by growth exteriorly and it heightens the political attention. latvia will face elections next year. lithuania, not long after that. so the cuts on the inside, they're easy enough for us to articulate as observers if it is outside, but they're foor more difficult to absorb if you're a citizen of the baltic. i think really that illustrates exactly how difficult it is going to be to steady the ship of these integral economies. >> martin, interesting interviews there. i think you're a bit overdressed, though. the prime ministers are much more casual than you are. get into the seaside spirit. martin, we still have richard cookson with us. martin, if i can bring you in, any comments or questions on those issues? >> slily what they're trying to do is stop a huge devaluation
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by, as you said, cutting nominal wages, by tightening fiscal positions. but i guess the big question in all of this going forward is does the huge cut in nominal wages and pensions, you know, the 40% nominal wage cut is huge. does that eat into the ability to balance the fiscal books? >> reporter: richard, i think it has to. in the case of lithuania, they're pretty confident that they're able to go to the capital markets and absorb this and they were able to get the smallest euro bond off only a few months ago. but they have a smaller amount to public debt and a much smaller credit rating in latvia. it's still clinging on to an investment grade rating from moody's investment service which i have to say mystifies a lot of people. ultimately, though, they are going to have to ride the global expansion story in order to ignite ex ports. that's going to be the only way to absorb, just as you have articulated, the massive wage and benefits cuts that have to
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take place in the economy. latvia tinkering with the idea of a progressive tax rate from a very, very low base. at some stage, the arithmetic isn't going to add up. i think this is why a lot of currency traders are working on the assumption that devaluation will have to come. but it's a time game. you want to know who blinks first? not exactly sure. but people are going to try to get to that hurdle of single currency membership and that might solve the problem. >> martin, thanks very much for that. have a nice day there. very breezy, too. >> martin baccardax, joining us from latvia. matt, over to you. >> all right. the justice department has signed off on oracle's $7.5 billion takeover of sun microsystems. in june, they said examine oracle's plans for licensing job software. but the department of justice cleared the deal without any
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restrictions. it still does, however, need approval from the european commission. if we want to check on the stocks and how they're doing right now, not a big move in either in frankfurt trade. also of note today, the government, the u.s. government is going to end the popular cash for clunkers program monday as the $3 billion budget has pretty much run dry. the clunkers program offers rebates to people who trade in an old gas guzzler for a new, more fuel efficient vehicle. it was launched a month ago and provided a temporary boost to the auto industry. ford and gm increased production to meet demand. but car dealers have explained that they're not getting reimbursed by the fed for their rebates. ious, maybe. morgan stanley has put out the help wanted sign. reports say the bank is hiring up to 400 traders and salespeople as it try toes dig its way out of three quarters of
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losses. morgan says it wants the workers for its foreign exchange, emerging markets and equity exchange derivatives. the ceo john mac steered the firm away from riskingkier investments when trading picked up genl, but rival goldman sachs, for example, and jpmorgan took advantage and morgan did not. let's check on the stock as we like to do. actually, 1.5% gain in frankfurt trade. chloe. >> thank you very much, matt. china's economy has apparently bottomed out. according to a government think tank, the world' third largest economy will grow 8.5% in the third quarter, picking up from the second quarter's 7.9% pace.. the state center says growth in bank credit will normalize in the coming months and that any abrupt slowdown in lending will hurt the economy. this comes amid reports that china will soon tighten capital requirements at mainland banks.
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certainly did spook a lot of investorses outside china today. moving on, beginning talks of a possible integration of their air cargo operations, jal and nippon yusen will aim to complete the deal by end of april next year. according to media reports, the company which cooperates with jal in its air cargo business may be asked to provide capital for the deal. take a look at both shares. japan airlines flat, nippon yusen flat, mitsui and company down 1.3% on the nikkei. >> the decline in the services sector almost came to a halt in august. services pmi hits a 15-month high with a robust reading of 49.5. manufacturing activity also contracted at a far slower pace
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than expected with a better than expected reading of 47.9. well, he's done it again. usain bolt has smashed his own 200 meet record measuring 19.19 seconds. his exploits at the world championships in berlin have played him as the greatest sprinter ever. incredibl incredibly, he said hadn't run a good race. imagine how quickly he would have gone if he wasn't tired, chloe. >> incredible, really, faster than the speed of light. still much more to come. a former ubs banker and a swiss lawyer are the first indicted for helping rich americans high money offshore.
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okay. we are going to get to our global roundup of the equity markets now and check in with our reporters. this is like a memory test. carolin, manus, annette, stephane and saijal, there we go. let's start off with carolin shaffer to start us off with what's going on in zurich today. >> ubs is still the biggest gainer on the index, up by more than 5%.
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that's because share allocations from the swiss governments, sale of its 9% stake yesterday was smaller than many investors had hoped for. there was strong demand for that action yesterday. but let's stay with the banks here. a swiss banker along with another swiss lawyer were indicted for helping u.s. clients evade taxes in the u.s. yesterday. that's the first time that a swiss banker at that time who did not work for ubs was charged in the tax evasion scheme. they were said to have urged american clients to have moved assets from ubs to another bank. and they also advised them not to disclose their accounts to the irs. and that's it from here. now let's go over to manny crannus for an update on the ftse. >> well, we finished our top option exploration. we went in ten points higher. we've go the come out firmer, up
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just under 30 points. undoubtedly what this market is trying to do. the miners are softer and i think that's overall to do with the growth story and perhaps that retraction there. we have some upgrades. that's what's driving the market, really. hsbc is tripling overall earnings assessment with that. and our object session with what's going on on the property market, up over 10% on the day as they see increased traffic and increased interest in their overall potential. let's go over to annette in frankfurt. >> well, we're lm up by almost 1% here on the lunch trading session. the main gainer here is
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volkswagen. market rally is up by more than 7%. traders are talking about short coverage. earlier this week, we reported that short positions in volkswagen shares are increasing and probably there is sort of like some nervousness about these positions and, well, apparently, short covering here one of the biggest reasons behind the surge in this stock. now we are heading over to paris and have a look at what's happening there. >> today is session is driven by strong economic data. the french composite pmi in august reached its highest level in 15 months, now at 59.9 points indicating that the economic activity is not contracting any more in france. that's very positive news. in terms of individual stocks, eads is one of the top gainers this morning, up almost 2% after boeing indicated late yesterday that the net order since the beginning of the year, we're only at 47 opinion that's a big difference with airbus which
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announced a couple of days ago that since the beginning of the year, the company received 140 orders and only 22 confirmations. so airbus is leading the race since the beginning of the year in terms of commercial activity. also in focus the, the banking sector after negative starts. the banks are in better shape. just a few days, that's the last trading session before the meeting with the finance minister, christine lagarde on monday to discuss the credit policy in france but also and probably most important, the bonuses, the french government would like the banks to apply in moderation in terms of bonus payment in the country. let's have a look now at the asian markets with saijal in singapore. >> hi, stephane. a lot had to do with more news coming out of china. this time there were reports that the banking regulator there could tighten capital rules. that could mean reigning in lending. reports saying that they're
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seeking feedback from banks. but again, these were reports. and we saw a lot of selling off in the other markets, not so much the shanghai composite. in fact, that market closing up. very different picture from the h-shares, where we saw the banking stocks in hong kong being very weak, and that's sending the hang seng index down 0.6%. a lot about risk aversion today. the yen surging to around a one-month high. that weighed on the exporter stocks in japan. we saw a time of weakness there, particularly with the autos which were pretty much weak throughout the morning as well as the afternoon basically because of this ending of this cash for clunkers program. as far as south korea goes, the kospi up 0.33%. we saw decent gains there, mainly in some of the chip related stocks, we saw an upgrade for some of the stocks there. the dram plays as well as gains from the auto plays, like
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hyundai motor, up 3. %. now over to matt in the u.s. good morning, matt. >> good morning, thanks. i appreciate it very much. we'll get a lot of attention looking out towards jackson hole today. of course, fed chairman ben bernanke is going to be speaking about the lessons that he learned from the financial crisis. there are a few items on our economic calendar. existing home sales come out at 10:00 a.m. new york time. the forecast is for 2.2% at an annual rate of 5 million homes. that would be a ten-month high. just a couple of earnings reports today, we'll get numbers from the retailer ann taylor as well as jm schmuckers, market leader in peanut butter and jelly technology. that is your goolobal stock wat. still to come, the ftse 100 closed at a new 2009 level high on thursday. our next guest says it is now
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time to buy the dips. do you agree? e-mail us.
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31 minutes past the hour. here are the top business stories making headlines from around the world. in the u.s., ben bernanke is going to look back on the fm crisis today. but traders, they're looking ahead to the fed's possible exit strategy. >> i'm becky meehan. in europe, service and manufacturing sectors return to growth in august. >> hello, i'm chloe cho. china's official think thank says china's growth could hit 8.5% and warns of an agrupt slowdown. >> thanks for watching "worldwide exchange." people are wondering if this three-day streak can continue for the week or the month, for that matter. not a lot of pull right now. a little positive for the dow. the nasdaq and the s&p have
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firmed up a bit since last check, so maybe we will go higher for four days here today. taking a look at the treasury market, the ten-year yield, little change, but steady at just under 3.5%. 3.44% was the last check. becky. >> let's check on the european bourses, as well,s while we're at it. we saw the bourses opening lower. we see that strength continuing this time around, really. day high for the ftse 100, 0.6% higher there. we had closing highs for 2009 yesterday. we'll get another one today if you get this rate. the dax similarly adding 0.9% and almost 0.8% higher for the cac. the smi has been strong all day and continued to be so. quick check on the dollar rates, as well. we are looking at dollar/yen, 93.73 or thereabouts. euro is gaining a bit of ground today, as well. 1.4303. sterling/dollar, 1.6492. and euro/sterling, as wel
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well, 0.8670 is where we currently stand. chloe, what's been going on in asia? >> you know, it's all about china once again. it was a choppy trading session here in asia, plus a roller coaster session on the shanghai composite. although it did manage to end higher by 1.7%. this news about china possibly tightening capital requirements for banks sent a lot of jitters to regional investors. but the local investors seemed to take it in their stride. plus, we had bank earnings pretty much meeting expectations. npos, pretty low levels, as well. august loan levels seem to have bounced off from the july levels. that's still a third of what we saw as the record high in june. all in all, there you go, the final scores. the nikkei down 1.4%. a lot of automakers in reverse here because of the cash for clunkers program running out of steam next month. the hang seng also going the
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other way. so had a very interesting picture. the energy prices at this one, nymex light sweet crude gaining ground at $73.07. let's take a quick check on brent. could be following the way of the u.s. futures as they firm up. and it's over to matt. >> chloe, thanks very much. time to talk business here on market strat by. we're bringing in charles lemonides, founder and ceo of value works and, of course, hsbc's richard cookson is along for the ride, as well. charles, the note is suggesting that you're pretty bullish here today. you think that the economic situation has dramatically improved. you're saying buy the dips here today. i'm wondering where your confidence comes from. there must be some concern that maybe we priced in a lot of the good news already.
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>> the market is down 20% from a year ago and down significantly from the highs of two years ago. after you come out of the markets the way we have, the market will tend to lose its sellers and come out of a very high period. >> so give me an idea of how much higher and how much more prolonged. >> i think by the end of this year or into next year, we could close the gap on last fall. what happened last fall was the result of a financial panic. as that financial panic recedes into history, the impact on investores and on the economic environment is going to reviewed. that productive capacity in the global economy will revert to the levels previous to that collapse and that is going to be reflected, i think in stock prices coming into the end of
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this year, first quarter of next year. >> joe, this is richard cookson in london. i guess the big question here is the u.s. consumer and the old adage is that you never make money betting against the prophesy of the u.s. consumer. consumption is very weak, retail sales is very weak. do you see that reversing, then? >> i'm not really focused on the u.s. consumer the way so many commentators are. i don't think the beginning stages of a recovery tend to be driven by consumer spending. i think they'll by driven by inventory builds and a more moderate pace of activity. the other thing they always have taught you is not to fight the fed. economieses tend to respond to monetary stimulus. the economy is being pumped with tremendous monetary stimulus and tremendous fiscal stimulus. the u.s. government stimulus package is just hitting the economy in the second and third
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quarter. that's government spending that's going to lead the growth in the third and fourth quarters of this year. and so it's government spending, i think, that leads right now. inventory builds, i don't think you need the consumer to lead for at least 12 months and by that time, i think you'll be ready. >> richard, i think you want to come back to those points there. but he says there's no destruction of production capacity. this isn't like the end of tworld war two where factories have been bombed and there's less population than there was before. once we got off the initial panic that we did fall into a depression and didn't, why shouldn't things just get back to normal? >> i guess our big question here is deleveraging. if you've been running as a company or particularly as a household with too high debt levels, then you're simply going to be reigning back on your spending. you talk to any of your mates in either the uk or the u.s. where
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these trends are particularly exaggerated, what are they going to be doing? they're going to just try and pay off debt. that's a big headwind much like you saw in japan to economic growth. it's not a question of economic capacity. it's a question of top line growth for companies. if top line growth doesn't come through, then you're not go the going to look at this surge in profits. >> that's certainly a great point. charles, just as richard pointed out, a lot of investors take a look at top line growth. since august 4th, a lot of global investors have been taking their cues from the shanghai composite. very volatile trade there. not a very sophisticated market. how can you be as bullish, given the volatility that we've been seeing? >> you know, we've seen volatility on the downside over the past year and a half, two years. i can be really, really bullish because i think the worst of that economic impact is very much behind you and i think
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there's tremendous cash on the sidelines. there will be a tremendous amount of buying coming into these markets. investors have been caught holding way too much cash. you have the calendar, i think, very much working for you. investors come back to their desks over the next month or so or over the next two weeks. those that have been seeing this rally will be pressed to put money to work and the market will chase that higher. i think you have a big rally behind you because the economic environment will be better based on the stimulus packages and the fed easing. >> charles, thanks very much for that. stay with us for a little longer because we want to come back to you in a few moments with more thoughts on what's going on in the u.s. richard, let me come back to you for another moment. richard cookson, why don't you leave us with a final thought as we go into the weekend. still very light volumes, a lot of people telling us that we need to wait a while before we
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get too excited about direction in the markets. what are your overriding thoughts about what's going on at the moment? >> i suppose my first question is i'm not sure stocks are as cheap as some believe. the u.s. consumer may come through eventually and therefore you get a surge in profits. from my perspective, i'm much happier playing this recovery and risk appetite for credit markets where they've been leaking out a little bit the past few days. they're historically cheap. this year, it's been a much, much more profitable way of doing it. i'm pretty comfortable sticking with that strategy at the moment. >> richard, that you can so much for staying with us. >> my pleasure. >> richard cookson from hsbc. >> let's cross over live to tokyo and check in on what
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happened with the trading day there with nozomu kitadai from the nikkei. great to see you, kitadai-san. >> exporters were dumped on back of a higher yen. the nikkei index finished at 10,238 after dropping 10% in the afternoon on moves that china is moving to tighten bank lending rules. the u.s. government's decision to end its cash for clunkers program dropped down motor stocks. toyota motor fell nearly 3%. japan airlines both remained unchanged despite an announcement that they have reached an agreement to start negotiations to merge their air cargo operations. according to the latest nikkei survey, the opposition party of japan will likely achieve a land slide victory in the general elections on august 30th. the telephone survey this week of more than 10,248 individuals shows that japan's biggest
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opposition party is on track to win more than 300 of the 480 seats in the lower house, a result that would fit the long, dominant liberal democratic party from power. that's a wrap in tokyo. back to you, chloe. >> that dpj victory would be 50 years in the making. thanks very much. matt. >> still to come on "worldwide exchange," looking for the eggs. ben bernanke will address bankers in jackson hole, wyoming. will he give me clues on a fed exit strategy?
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welcome to cnbc aes "worldwide exchange." here are some of the top business stories we're tracking from around the world at this hour. the justice department has signed off on oracle's $7.4 billion take yoef of sun microsystems. in june, you'll recall, anti-trust regulators said they would examine the merge. but the doj cleared the deal without any restrictions. it does, however, still need
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approval from the european commission. check on the two stocks in frankfurt, oracle down a little pt. sun microoff just a little itself. the federal communications commission will meet next thursday to review businesses practices in the u.s. wireless sector. regulators examine whether the industry is encouraging invasion and investment, collect information on the state of competition and they're going to look at ways to protect consumers. a big issue will likely be the exclusive deals between hand setmakers and wireless carriers. at&t's deal with the wireless carriers comes to mind as does print's partnership with the palm pre. thursday, shares of both of those companies were mixed, if you will. hand setmaker palm was the only decliner of the four. chloe. >> and china's economy has apparently bottomed out. according to a government think tank, the world's number three economy will grow 8.5% in the
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third quarter picking up from the 7.9% level. the sate information center added that they would likely stick to its monitory policy and that any abrupt slowdown of lending would hurt the economy. this comes amid reports that china will soon tighten the capital requirements at mainland banks, a key concern in today's equity trading today. it's over to becky. >> the decline in the pmi services seconder lm came to a halt. services pmi hit a 15-month high with a robust reading of 49.5. manufacturing activity, also contracted at a far slower pace than had been vekted with a better than anticipated reading of 47.9. well, he's done it again. usaib bolt has smashed his 200 meet record coming in at 19.19.
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welcome back po to "worldwide exchange." we want to take a check on what's going on in the european bourses. what started off as a negative open is turning into a pretty positive session with the ftse 100 now registering a daily high, higher by 1%. we're looking at a level of just over 4,800 at this stage. the other bourses in europe look even stronger. kax up 1.25%, the cac is pushing higher by just over, in fact, 1.3%. so these markets do seem to be
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gathering a bit of speed as we go through the day. we should result in closing highs for 2009. let's talk about what's going on elsewhere. after "worldwide exchange," we'll have the u.s. "squawk box" for viewers in europe, asia and the united states. becky is here to tell us what we can expect. becky. good morning, everybody. the rocky mountain fed. central bankers are gathering in jackson hole, wyoming, to get a message from ben bernanke this morning. our steve leadman is there. he'll be checking in at 7:00 a.m. eastern time. one of the big questions is the future of ben bernanke as fed chief. former dallas fed president will be giving us a report card on how bernanke is handling the financial crisis and whether he thinks reappointed. more town halls voicing their opinions over health care. we have senator tom coburn with us today. also marsha blackburn.
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they're going to report to us about how their constituents are feeling about this plan and what they are hearing. cash for clunkers is running on empty. that controversial program giving the industry a boost. we're going to take a look at what is ahead on the road for car sales. becky, "squawk box" is coming up at the top of the hour. we mentioned that steve leisman will be joining us in just over an hour's time. ap story out today about the fed and it says that there was a reporter who has been entertaining them, a television correspondent who has been playing guitar and entertaining them and we're going to find out if that's steve. >> what a multi talented guy he is. we know he's skilled, but that's extraordinary. maybe we should get him playing his guitar on cnbc. >> exactly. >> thanks very much, becky. we have a few more minutes on the show, though. let's get out to matt for a bit more with our u.s. guest. >> all right. i don't know if he plays guitar or drums or anything, but charles elementarinidies joins us here with a discussion on what our trading day might look
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like. charles, you can give us the instrumental disclosure if you feel like it, but tell me about your thoughts on inflation. you're willing to say take it off the table for at least six months, which is sort of intermediate term. but after that, are you saying all betts are off and inflation is going to come back? >> quite frankly, the markets went through a bit of a jitter this week when mr. buffett put out his op-ed piece suggesting there could be inflation down the road if policy measures do foolish things prospectively. and it seems similar to me to where we were a year ago where we were at a cusp of an economic expansion. if policymakers didn't do something foolish. well, a year ago, policymakers did something really foolish and created a financial panic. i don't think you can count on them doing something foolish to stoke inflation six months, a year down the road. yes, today's massive stimulus does not make sense once the
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economies are expanding. today's massive stimulus doesn't make sense once you've got economic stimulus. somewhere down the road, that inflation stimulus should be taken away. >> charles, we get existing home sales today. gauge the market's ability to digest bad news, economically speaking, not necessarily today, but just in the short-term here. >> you know, the markets had a good run and you're bumping close to the highs. so if you see bad news that's really important, it wouldn't surprise me to see a 3%, 5% pullback. that said, a lot of the bad news has been priced into where we are and any pullbacks that happen are more likely to be short-term than long-term. and, you know, the other thing that you've got to look at is, you know, what news do we have? mr. leisman plays guitar. there's very little on the economic calendar over the next couple of weeks and that's very important. we're not going to go that scare.
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good morning. the background is beautiful, but the stakes have never been higher for fed chairman ben bernanke. out of cash for clunkers, the u.s. government getting set to put the brakes on its much hyped $3 billion program. and could friday make it four straight? the bulls are banking on it as "squawk box" begins right now. good morning, everybody.
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welcome to "squawk box" here on cnbc. i'm becky quick along with carl quintanilla. joe is out today. mike holland will be spending the day with us in just a moment. our top story comes today from the mountains. fed chairman ben bernanke is set to deliver remarks in jackson hole, wyoming. he is scheduled to start speaking at 10:00 a.m. eastern time. following a year of emergency birminghams, bernanke is expected to talk about the challenge of pulling back without disrupting a recovery. so the markets will be keyed in over word this morning. our steve leisman is until the grand tetons with chairman ben bernanke and others. >> and you mentioned this reuters story that talks about sort of the color, what's going on and what it's like. being in jackson hole, there's not a lot to do, right? and while it's busy, reuters says the musical entertainment has been known to feature a beer emboldened television
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correspondent playing guitar. >> as soon as i read that, i started cracking up. i bet you that's steve. we're going to have him on and find out if he is, indeed, the beer and guitar wielding television correspondent. no doubt, right? >> a report released yesterday shows banks have trimmed borrowing. commercial banks averaged $30.7 billion in daily borrowing in the week. that amount is down from $33.9 billion the week before. but the fed did increase its financing activities in other areas. talf lending is boosted to $36.3 billion from $29.8 billion the previous week. and the fed ramped up its purchases of mortgage-backed securities. >> transportation secretary ray lahood says that the government's cash for clunkers program is ending monday at 8:00

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